Ready to pick up speed

Tokyo, Feb. 11 (Reuters): Mazda Motor Corp raised its annual earnings forecasts on Friday for the second time in three months after quarterly results zoomed past expectations, sending its shares up 9 per cent to levels not seen since 1999.

Driven by a string of new, well-received products such as the Mazda5/Premacy minivan and MX-5 sports car, the Hiroshima-based company is projecting the strongest profit growth among Japan?s top car brands this year.

A favourable weakening in the yen was one factor behind the revised forecasts, but Mazda also attributed the surprise improvement to bigger cost cuts, lower marketing outlays and a more profitable mix of products than indicated in November.

For the year to March 31, Mazda, in which Ford Motor Co has a controlling one-third stake, lifted its operating profit forecast by 24 per cent to a record 118 billion yen ($993 million), largely due to an additional 12.9 billion yen windfall from a softer yen. That would represent a 42 per cent jump from last year.

?It?s not just forex. There were improved fundamentals, including a better cost structure and strength in the mix of sales,? said Kurt Sanger, auto analyst at Macquarie Research.

?It?s certainly a big positive and a very solid result.?

After touching a high of 589 yen, Mazda?s shares closed up 7.8 per cent at 582 yen on Friday, against a 1.1 per cent drop in the main Nikkei average.

Mazda now expects annual net profit of 60 billion yen instead of 55 billion yen. It raised its revenue projection to 2.89 trillion yen from 2.82 trillion yen, even though it expects slower vehicle shipments in all major regions.

It lowered its global sales forecast by 18,000 units to 1.152 million vehicles, which would be up 4.3 per cent from last year.

Mazda has had a lacklustre performance in Japan and the United States, but resurgent demand in Europe and ballooning sales in China have helped make up for the weakness.